In order to assist Pakistan State Oil (PSO) in paying down its Rs. 937 billion cyclical debt receivables, the government is developing a proposal to transfer its shares in a number of power projects to PSO.
According to a national daily, the coalition administration is working on this idea to reduce receivables of over Rs. 153 billion owed to public sector powerhouses in accordance with the International Monetary Fund (IMF).
The government wants to sell its ownership stake in the Nandipur and Guddu power plants (GPP). According to the Finance Ministry’s letter to the Petroleum Division dated February 20, 2023, the proposed deal will resolve PSO claims against the two firms.
Yet PSO wants to have authority over Gujranwala Electric Power Company rather than the GPP (GEPCO). In the letter, it was requested that the Petroleum Division justify its preference for controlling GEPCO over GPP. Additionally, according to the NPP’s proposed transaction structure, the government should divide the power plant into a new corporation after paying off all outstanding debts.
PSO might also be permitted to sell 30% of the power produced under the B2B agreement in relation to the proposed purchases, with the remaining energy being sent to the national grid. PSO wants to upgrade the asset in the future to increase its efficiency and position it for the merchant market based on the planned transaction structure and procedures for NPP and GEPCO.
Sui Northern Gas Company Limited (SNGPL) owes PSO Rs. 487 billion and is another defaulter. Relevantly, PSO has over Rs. 762 billion in receivables.
PSO has been purchasing liquefied natural gas (LNG) from Qatar since 2015 as part of a long-term government-to-government agreement, and it is obligated to make payments on schedule. However, over time, receivables against LNG shipments to SNGPL grew and surpassed Rs. 487 billion, including an exchange loss of Rs. 6.7 billion claimed by PSO owing to rupee devaluation.